Inside The Grey Market Rush For India’s IPO-Bound Startup Shares

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 Indian startup ipo grey market shares  Inside The Grey Market Rush For India’s IPO-Bound Startup Shares

A flurry of startup IPOs is expected to hit the market in the coming weeks with SEBI having approved a few of them in recent weeks. Fino Payments Bank, MobiKwik, Nykaa received the market regulators’ nod to go public, in the last few days, while over seven are yet to receive a go-ahead. 

The shares of the two fintech startups (Fino and MobiKwik) have mainly been on the rise, post the IPO approvals. In another significant development this week, the unlisted arena has started witnessing active trading in the unlisted shares of hospitality unicorn OYO post the company expanded its paid-up equity capital share base

Fino PayTech Continues Uptrend

The price of unlisted shares of Fino PayTech, the parent company of Fino Payments Bank is now in the range of INR 425-430, 6.25-7.5% higher than INR 400 a week ago.

Earlier this month, the Mumbai-based payments bank received SEBI’s nod for its IPO. The four-year-old payments bank is looking to raise INR 1,300 Cr through its IPO.

“Post the rights issue of Fino PayTech at INR 252 per share in September, there were expectations of selling pressure as the issue price was lower than the prices in the unlisted market then (INR 350). However, to our surprise, its prices increased post the rights issue,” said Manan Doshi, cofounder, Unlisted Arena.

Doshi also said that the possibility of a reverse merger of Fino Payments Bank with its holding company Fino PayTech post the much-awaited IPO also has kept the investor sentiments robust.

The profitable business of Fino compared to its fintech contemporaries gives it an upper hand in terms of the positive investor sentiments.

MobiKwik’s Unlisted Share Price Rises 

MobiKwik, which recently became a unicorn, is trading positively, although largely around last week’s level.

At the higher end, its prices are around INR 1,350 per share, same as last week, while at the lower end, its share price increased to INR 1,325 from INR 1,300 last week.

Traders said that the unicorn status gained by the Delhi NCR-based digital payments startup ahead of its IPO has been a significant factor in investors’ recent bullish sentiments.

On October 13th, MobiKwik entered the unicorn club after a few employees exercised employee stock option plans (ESOPs). Former Blackstone India head Mathew Cyriac led the transaction.

The recently minted unicorn is likely to hit the public markets around Diwali. The capital market regulator approved its public offer worth INR 1,900 on October 7th, 2021.

A Look At IPO-Bound Startups Unlisted Share Prices  Inside The Grey Market Rush For India’s IPO-Bound Startup Shares

Paytm Shares Tepid On Valuation Concerns

Another fintech giant, Paytm, which expects to bring about the largest IPO in India’s history, is trading on a subdued note in the unlisted space around INR 3,600 per share.

Analysts said that the trading volumes have declined for Paytm as investors anticipate an IPO at a lower price point, around INR 2,400 per share, given valuation concerns and the market expected valuation of $20 Bn – $24 Bn.

“This will be a bulky IPO worth over INR 16,000. They will have to keep the evaluations (IPO price) low to get more and more subscribers on board,” Unlisted Arena’s Doshi said.

Speaking to Inc42, Sandeep Ginodia, CEO of Altius Investech said, “Paytm shares have witnessed a subdued trend in October, after being largely bullish in July, August and September.”

Founded in 2009 by Vijay Shekhar Sharma, One97 Communications, the parent company of Paytm, filed its draft red herring prospectus (DRHP) in July for public listing with an aim to raise INR 16,600 Cr. It currently enjoys support from Ant Financials, SoftBank, Elevation Capital, Discovery Capital, and others.

As the fintech unicorn aims for the biggest IPO issue after Coal India, Paytm is in talks with multiple sovereign wealth funds such as the Abu Dhabi Investment Authority (AIDA), Government of Singapore Investment Corporation (GIC), Canada Pension Plan Investment Board (CPPIB), and financial investors such as US-based BlackRock and Japan-based Nomura to consider bidding as anchor investors in Paytm’s pre-IPO placement. SEBI is yet to approve its IPO.

Policybazaar’s Unlisted Shares Decline

The shares of Policybazaar which started trading in the unlisted market a couple of weeks back have declined from the highs of INR 2,200 reached last week have dropped by 20% to INR 1,700-1,800 now. 

Market experts said that the fintech startup’s anticipated IPO price of its shares is INR 1,100, which has brought down the unlisted share prices.

Earlier this month, IPO-bound PB Fintech Limited infused fresh capital worth INR 99.9 Cr ($13.4 Mn) in its insurance aggregating platform Policybazaar.

As per the latest regulatory filing Policybazaar Insurance Brokers Private Limited, in a meeting held on September 24th, the board of directors has approved allotting 20,20,202 equity shares of Policybazaar Insurance Brokers at a premium price of INR 485 to its parent firm PB Fintech Ltd. 

In August this year, Policybazaar joined the slew of Indian startups going for its IPO. The fintech startup filed its draft red herring prospectus (DRHP) with the market regulator for raising INR 6,017 Cr.

Unlisted Shares Of OYO Witness Active Trading Post Stock Split

SoftBank-backed Oravel Stays, which runs the hospitality unicorn OYO, filed for its INR 8,430 Cr IPO on October 1st. Its shares were largely not traded in the unlisted market due to high prices of around INR 45 Lakh, analysts said.

However, OYO’s unlisted shares have started to witness action post the company recently expanded its paid-up share capital base through a stock split and allotment of bonus shares.

It undertook a 1:10 split of all equity and preference shares and 3,999 bonus shares for each share held to equity shareholders. For preference shareholders, the conversion ratio to equity shares has been changed from 1:1 to 1:4,000.

Following the development, its startup’s shares are now trading around INR 110-125 apiece, traders said.

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